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Global Market Report - 23 December

Lex Hall  |  23 Dec 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise despite a mixed night on Wall St as a new strain of covid offset enthusiasm over a pandemic relief bill.

The Australian SPI 200 futures contract was up 51 points, or 0.8 per cent, at 6560 points at 8.30am Sydney time on Wednesday, suggesting a positive start to trading.

The S&P 500 was essentially unchanged on Tuesday as worries over a new variant of COVID-19 and downbeat economic data dampened enthusiasm over the passage of a long-awaited pandemic relief bill in Washington.

The Dow Jones Industrial Average fell 105.17 points, or 0.35 per cent, to 30,111.28, the S&P 500 gained 1.18 points, or 0.03 per cent, to 3,696.1 and the Nasdaq Composite added 57.69 points, or 0.45 per cent, to 12,800.21.

Locally, millions of Sydney residents will hear this morning about the fate of Christmas, with Gladys Berejiklian to announce at 11am whether restrictions will be relaxed or whether they’ll remain in place, The Australian reports.

The S&P/ASX200 benchmark index closed lower by 70.3 points, or 1.05 per cent, to 6599.6 on Tuesday, after Wall Street closed lower.

The decline sets the index back to levels recorded at the start of the month.

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The All Ordinaries lost 74.5 points, or 1.08 per cent, to 6845.5.

The energy sector was hardest hit, down 2.75 per cent, as oil prices tumbled almost three per cent.

Gold was down 0.7 per cent to $US1863.56/oz; Oil was down 1.4 per cent to $US50.21 a barrel; Iron ore was down 6.8 per cent to $US164.53 a tonne.

Meanwhile, the Australian dollar was buying 75.27 US cents at 8.30am, down from 75.59 US cents at Tuesday’s close.

Asia

China shares fell on Tuesday as investor sentiment was dampened by concerns that a new variant of the coronavirus virus spreading in Europe could cloud the outlook for global economic recovery from the COVID-19 pandemic.

Sell-off pressure intensified amid persisting concerns over Sino-US trade tensions after the US further expanded its blacklist of Chinese companies with so-called military connections.

The Shanghai Composite Index closed down by 1.86 per cent, or 63.79 points, to 3,356.78. The Shenzhen Composite Index dropped 1.76 per cent, or 40.50 points, to 2,264.48. The blue-chip CSI300 index fell 1.63 per cent, or 82.07 points, to 4,964.77.

In Hong Kong, at the close of trade, the Hang Seng index was down 187.43 points or 0.71 per cent at 26,119.25. The Hang Seng China Enterprises index fell 0.17 per cent to 10,384.18.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.48 per cent, while Japan's Nikkei index closed down 1.04 per cent.

Europe

European shares posted their best day in six weeks on Tuesday, rebounding from a sharp sell-off as optimism around Brexit and US stimulus helped to allay worries of a further hit to the global economy from a new coronavirus variant in Britain.

The pan-European STOXX 600 index finished up 1.2 per cent on broad-based gains, recovering from a more than 2 per cent slide in the previous session, which was also its biggest one-day drop in nearly two months.

The European Union is giving a “final push” in a bid to strike a Brexit trade deal with Britain, its chief negotiator said on Tuesday, with the two sides inching towards agreement on fishing —a major sticking point—days before the end of Britain’s transition deal since it left the bloc.

“(The progress in fishing) highlights the willingness to move towards something that will eventually break the current deadlock,” said Joshua Mahony, senior market analyst at online trading platform IG.

Helping London’s blue-chip index reverse early losses, data showed Britain’s economic recovery from its coronavirus crash was quicker than previously thought in the third quarter. The index closed 0.6 per cent higher, breaking a three-day losing streak.

The losses were triggered by the emergence of a fast-spreading new coronavirus variant in Britain, which has forced wider lockdowns there and led countries around the world to close their borders to the UK. The EU on Tuesday recommended rolling back border closures to allow freight to resume.

“The COVID-led economic isolation of the UK (is) serving to provide a heavy dose of reality of the kind of disruption that could come if negotiators fail to agree a (Brexit trade) deal by year-end,” Mahony said.

Technology stocks and Brexit-sensitive banks led the rebound in Europe, while materials stocks lagged as they tracked a decline in underlying commodity prices.

Meanwhile, US President Donald Trump on Tuesday signed a stopgap measure to fund US agencies for another week after Congress passed a long awaited US$892 billion ($1.2 trillion) COVID-19 aid package overnight.

AstraZeneca was the biggest weight on the pan-region index, down 1.5 per cent after its experimental asthma drug developed with US partner Amgen failed to meet the main goal of a late-stage trial.

North America

The S&P 500 was essentially unchanged on Tuesday as worries over a new variant of COVID-19 and downbeat economic data dampened enthusiasm over the passage of a long-awaited pandemic relief bill in Washington.

The Dow was lower, while Apple Inc helped fuel the tech-heavy Nasdaq’s advance.

“The market trades in anticipation of an event,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “And once you reach that point as we did yesterday with the passing of the stimulus bill, the market is looking for the next catalyst to drive it forward.”

Apple was an outlier amid a broad sell-off, gaining 3.6 per cent and providing the biggest lift to all three major US stock indexes on news of the company’s plans to roll out an electric passenger vehicle by 2024.

Overnight, Congress passed a pandemic relief package worth US$892 billion after months of a partisan tug-of-war, aimed at propping up an economic recovery faltering under the weight of restrictions aimed at containing a coronavirus resurgence.

That resurgence continues to swell, infecting 214,000 Americans every day, prompting mandatory shutdowns and pushing hospitals to capacity.

A fast-spreading new variant of the virus discovered in Britain has brought movement in and out of the UK to a halt and sent vaccine makers Pfizer Inc and Moderna Inc scrambling to ensure their drugs were effective against it.

Fears of the coronavirus and optimism about an eventual economic recovery made for extreme volatility on Wall Street in 2020, with the S&P 500 logging daily gains or losses of 2 per cent or more over 40 times in the year so far, the most in over a decade.

“The changes that have occurred in the world, I don’t think anyone who’s working today has seen anything like this,” Pavlik added. “Nobody was prepared to deal with this situation where nearly the whole world was shut down.”

On the economic front, consumer confidence unexpectedly dropped while sales of pre-owned US homes posted their first decline in six months.

The Dow Jones Industrial Average fell 105.17 points, or 0.35 per cent, to 30,111.28, the S&P 500 gained 1.18 points, or 0.03 per cent, to 3,696.1 and the Nasdaq Composite added 57.69 points, or 0.45 per cent, to 12,800.21.

Of the 11 major sectors in the S&P 500, only tech and real estate were green.

Tesla fell 2.4 per cent, extending its slide on its second day as a S&P 500 constituent.

Peloton Interactive jumped 10.7 per cent as brokers hiked their price targets on the stock on the heels of the company’s announcement that it would buy peer Precor in a deal worth US$420 million.

Amgen slid 2.5 per cent and was among the heaviest drags on the Dow, after disappointing results from a late-stage study of an asthma drug developed in a partnership with British drugmaker AstraZeneca.

is content editor for Morningstar Australia

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